Late last month, in an April 24, 2025 status report to the court, the Office of Mission Support of the EPA indicated that it has terminated 377 prior grants and that it intends to issue over 400 additional notices of termination for other grants made under the Inflation Reduction Act.

For a copy of the Report – https://insideepa.com/sites/insideepa.com/files/documents/2025/apr/epa2025_0758a.pdf

All told, this represents a termination of over 40% of the active grants that the EPA was overseeing under the IRA. Per EPA officials, the value of grants provided under the IRA that have not been terminated is over $39 billion dollars. The EPA has, thus far, declined to identify the value of the grants that have been terminated.

In addition to the noted terminations, per reporting by Inside the EPA, Administrator Zeldin indicated that the Trump Administration plans to cut EPA’s total spending by at least 65%, noting that he clarified that this requires reductions of less than 35% from core fiscal year 2024 spending given the above cuts to one-time funding under IRA.

The EPA is arguing that it has the authority to terminate grants under a provision in an April 15 order in the Woonasquatucket case that allows for pausing funds on an individualized basis.

That order, which generally blocked the administration’s freeze on grants authorized by the IRA and the Infrastructure Investment and Jobs Act (IIJA), enjoined EPA and the Departments of Energy, Housing and Urban Development, Interior and Agriculture from “freezing, halting, or pausing on a non-individualized basis the processing and payment of funding” under already-awarded IIJA and IRA grants.

The EPA stated that “EPA understands the Court’s Order to require that all funds appropriated under the IRA or IIJA be unfrozen unless there is a pre-existing determination (from before entry of the preliminary injunction) to pause that funding on an individualized basis for some other, independent reason (i.e., apart from the fact that it was appropriated under the IRA or IIJA),” Dan Coogan, Deputy Administrator said. The “still-paused, soon-to-be-terminated IRA grants meet those criteria.”

Coogan further indicated that all termination decisions were made on Feb. 13, March 3, March 10 and April 14 — all before the court’s order.

According to EPA’s filings and Inside the EPA reporting, grants slated for termination include the Environmental Justice Collaborative Problem-Solving Cooperative Agreement Program; Surveys, Studies, Investigations, Training and Special Purpose Activities Relating to Environmental Justice; Environmental Justice Government-to-Government Program; Environmental Justice Small Grant Program; Financial Assistance For Community Support Activities To Address Environmental Justice Issues; Environmental Justice Thriving Communities Grantmaking Program; Environmental and Climate Justice Block Grant Program; and Reducing Embodied Greenhouse Gas Emissions for Construction Materials and Products.

In addition to its statements in Woonasquatucket, EPA has announced that it is terminating a host of environmental justice grants at issue in another funding freeze case, The Sustainability Institute, et al. v. Donald Trump.

For a list of the Environmental Justice grants that have been terminated by the EPA – see https://insideepa.com/sites/insideepa.com/files/documents/2025/apr/epa2025_0758b.pdf

Green Spouts – The EPA has indicated that it will reimburse all grantees’ costs incurred prior to formal notice of the termination. That said, it remains to be seen how many, if any, of the grant recipients will respond to the cancellation of previously approved grants and, if and/or how many lawsuits are filed claiming damages or detrimental reliance on funds invested in projects already based on receipt of a grant award.

Moreover, potential plaintiffs are likely to argue that terminating active grant contracts goes well beyond the court’s order regarding “freezing, halting, or pausing” funds.

Grant recipients of frozen or terminated IRA grants have attested to widespread financial harms, including having to lay off staff, being unable to pay subcontractors and being unable to move forward with their projects due to uncertainty.

Given the above, my view is that termination of these grants will likely lead to a host of lawsuits challenging the EPA’s authority to remove funding once said funding has already been granted. While the Administration may be hopeful that delay and the length of these court cases that challenge the EPA will lead to various non-profits losing funding and staff while challenging the validity of the funds freeze. Moreover, the loss of staff and the loss of the ability to operate and deliver services is a tricky thing to value and ascribe a number to, which will likely lead to challenges on alleged damages as being too speculative. Then again, maybe that is the idea of freezing these funds.

Duane Morris has an active Sustainability and Risk Mitigation Team to help organizations and individuals plan, respond to, and execute on your Sustainability and Risk Mitigation planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Jeff Hamera, Jolie-Anne Ansley, Robert Montejo, or the attorney in the firm with whom you are regularly in contact.

A new Executive Order entitled “Maintaining Acceptable Water Pressure in Showerheads” (the “EO”) was released on April 9, 2025. https://www.whitehouse.gov/presidential-actions/2025/04/maintaining-acceptable-water-pressure-in-showerheads/

Ostensibly, the President was directing policy to address what he perceives to be over regulation of a part of our lives, and in this instance, the specific source of frustration is the belief that showerheads are over-regulated.

As readers are likely aware, for the last few decades, various pieces of equipment that we use in our homes and our commercial endeavors have been the subject of regulation at the Federal and State levels. While I was not there, my sense of these regulations is that they were focused on improving the efficiency of and thereby reducing the use of energy to power various types of machinery – the goal being, if the equipment is more efficient, then less power will be consumed in delivering the services sought by the piece of equipment (e.g., lights, boilers, HVAC, etc.).

These various levels of required efficiency are codified at 42 US Code 6295. If interested in the source material – https://uscode.house.gov/view.xhtml?req=granuleid:USC-2000-title42-section6295&num=0&edition=2000

Standards for showerheads and faucets:

(1) The maximum water use allowed for any showerhead manufactured after January 1, 1994, is 2.5 gallons per minute when measured at a flowing water pressure of 80 pounds per square inch. Any such showerhead shall also meet the requirements of ASME/ANSI A112.18.1M–1989, 7.4.3(a).

(2) The maximum water use allowed for any of the following faucets manufactured after January 1, 1994, when measured at a flowing water pressure of 80 pounds per square inch, is as follows:

Lavatory faucets	2.5 gallons per minute
Lavatory replacement aerators	2.5 gallons per minute
Kitchen faucets	2.5 gallons per minute
Kitchen replacement aerators	2.5 gallons per minute
Metering faucets	0.25 gallons per cycle

The EO indicates, as many would agree, that overregulation chokes the American economy…”. Furthermore, many might agree that the above mandates might be a bit over zealous and that their shower pressure has been diminished due to the required maximum water usage rates stated above.

Given this, shall we say, “pressure”, the President felt compelled to order the repeal of the Energy Conservation Program located at 10 C.F. R. 430.2 – meaning the above standards that apply to household and business items like light bulbs, boilers, HVAC equipment, refrigerators, micro waves, etc. In fact the EO contains language that “notice and comment is unnecessary because I [being the President] am ordering the repeal.” [bracketed language added]. I hereby direct the Secretary of Energy to publish in the Federal Register a notice rescinding Energy Conservation Program…”.

As one commentator, Jonathan Adler, noted, “if we want more water flow, that is a job for Congress, and if we want to conserve water, we would be better off with market pricing.” Moreover, he points out that the President’s assertion of authority “to repeal the regulation is a breath-taking assertion of presidential authority — and one that will almost certainly be rejected by the courts.”

Green Spouts: I find this EO a bit curious in that it will be very unlikely to change behavior at the home or business level given that showerheads have already been installed at our homes and businesses and, given human nature, it is unlikely (if I project my approach on my readers) that homeowners and business owners will remove existing fully functional showerheads or toilets or light bulbs or other equipment to potentially get better/stronger water flow or a different color of light, merely because an EO says so; especially prior to the piece of equipment needing repair or replacement. That said, before a homeowner or business owner looks to change its lights, HVAC, boiler, or indeed its showerhead, it is likely that the homeowner/business owner will look to analyze the cost that will be incurred once the replacement equipment is put into operation – (i.e., the operational cost of the new equipment). If the user is shown that the replacement equipment with the better water flow or more beautiful light will cost her/him more money over the course of use then it is unlikely (albeit possible) that the user will switch back to a more heavy user or less efficient source of energy or, in this case, water. Convenience is indeed relevant to the decision, but so to is the economic implication of our actions on ourselves, our pocketbooks and on society writ large.

Duane Morris has an active Sustainability and Risk Mitigation Team to help organizations and individuals plan, respond to, and execute on your Sustainability and Risk Mitigation planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Jeff Hamera, Jolie-Anne Ansley, Robert Montejo, or the attorney in the firm with whom you are regularly in contact.

On April 8th, the White House issued its latest pronouncement against climate change in one of its latest Executive Orders entitled “Protecting American Energy From State Overreach” – https://www.whitehouse.gov/presidential-actions/2025/04/protecting-american-energy-from-state-overreach/ (the “Order”).

Key Provisions of the Executive Order:

• Challenging State Climate Policies:

The Order directs the Attorney General and the heads of all federal agencies to identify and challenge all state and local laws that burden the identification, development, siting, production or use of domestic energy resources that are or may be unconstitutional, preempted by Federal law or otherwise are unenforceable.

• Promoting Fossil Fuel Production:

The Order emphasizes the importance of domestic energy resources, particularly oil, natural gas, coal, and other fossil fuels and focuses on the supposed discrimination of out of state fossil fuel energy producers.

• Reviewing Regulations:

The Order directs the Attorney General and all heads of federal agencies, including the Environmental Protection Agency (EPA), to review and identify and potentially rescind any state law purporting to address “climate change” or involving “environmental, social and governance” initiatives, “environmental justice”, “carbon or greenhouse gas” emissions and funds to collect carbon penalties or carbon taxes.

Timing:

Within 60 days of the April 8th (i.e., July 9, 2025), the Attorney General is directed to provide a report to the President regarding actions that should be taken to achieve the above stated objective and to recommend any additional Presidential or legislative action necessary to “stop the enforcement of State laws identified above that the Attorney General determines to be illegal or otherwise fulfill the purpose of the order“.

Impact on State and Local Climate Policies:

The Order is very likely to lead to federal legal challenges against state and local climate change policies, which seek to weaken efforts to reduce greenhouse gas emissions and combat climate change. States with these types of laws are very likely to respond and challenge the Order as being beyond the scope of what is legally permissible by Presidential executive orders. As such, the legality of the order is very likely to find its way into court and will take some months to sort out.

Theory of the Order:

The Order asserts that certain state and local laws and civil actions have exceeded constitutional limits and/or conflict with federal policy by directly “restricting the development, production, or use of domestic energy resources”.

The Order is broad in its scope but focuses specifically as well on New York’s, Vermont’s and California’s laws in the climate change area, many of which we have commented on in earlier posts if of interest.

In short, New York is following California’s lead in seeking to require companies to review and disclose certain risk factors of climate impacts on companies with over $500 Million of revenue and in requiring Scope 1, 2 and 3 emissions reporting if an enterprises makes more than $1 Billion in revenue. Vermont has passed a law which New York, California, New Jersey and Illinois are also considering that targets fossil fuel emitters and requires that such emitters pay for the damage that they have done in the applicable state. Cash payments from the historic emitters are then specifically designated to help pay for resiliency improvements to infrastructure in the applicable state. The Order also calls out California’s emissions caps and carbon credit trading system, which are described as penalizing fossil fuel companies for carbon use.

According to the Order, these laws and policies create barriers to interstate commerce, raise energy costs nationally, and interfere with the federal government’s role in enacting and implementing a federal energy agenda.

Green Spouts: While it was always expected that parties like the US Chamber of Commerce (who sued California for implementing SB 261 and 253) would also attempt to block Illinois, New York, New Jersey and Maryland from enacting climate disclosure requirements, I find it a bit surprising that the Trump Administration has decided to weigh in and enact a new Executive Order focusing on State rights and climate disclosure at this moment given what else is going on around the globe. Moreover, given the District Court’s ruling in the California case, it appears that if similar laws are passed in Illinois and elsewhere, that the constitutional challenges raised by the Order are not likely to withstand court scrutiny. This author’s view is that the various states will not back off of their own version of California’s climate bill, Vermont’s superfund type bill and California’s cap and trade regime and will fight the April 8th Executive Order tooth and nail.

Duane Morris has an active Sustainability and Risk Mitigation Team to help organizations and individuals plan, respond to, and execute on your Sustainability and Risk Mitigation planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Jeff Hamera, Jolie-Anne Ansley, Robert Montejo, or the attorney in the firm with whom you are regularly in contact.

On February 18, 2025, the Illinois House introduced and referred HB 3673 to its Rules Committee . See attached draft copy at https://legiscan.com/IL/text/HB3673/id/3109030/Illinois-2025-HB3673-Introduced.html 

Like the New Jersey, Colorado and New York bills that were previously reported on and which are being considered by their respective state legislatures, if enacted, the Illinois Climate Corporate Data Accountability Act could become the fifth bill passed in the United States, which bills are all aimed at requiring entities with connections to Illinois to report on their greenhouse gas emissions under Scope 1, Scope 2 and Scope 3 beginning 3 years from the effective date of the Illinois Bill (which could be as soon as 2028). Illinois would join Colorado, New Jersey, California and New York (if New York’s, New Jersey’s and Colorado’s bills move to passage) as the fifth state in the US in requiring this type of reporting for companies with over $1 Billion in revenue.

Between Illinois at $1.025 Trillion, New Jersey at $666.9 Billion, Colorado at $437 Billion, New York at $1.6 Trillion of real GDP and California at $2.9 Trillion of real GDP, these four states together would represent more than 30.8% of the US’s real GDP being subject to Scope 1, 2 and 3 reporting requirements for greenhouse gas emissions.

California passed their version of a very similar reporting bill, SB 253, in 2023, with an effective date of January 2026. Illionois’ bill, if enacted, required regulations to be passed by July 1, 2026, with an effective reporting requirement for entities subject to the bill during 2027 for Scope 1 and 2 and 2028 for Scope 3. Colorado’s bill if passed will require reporting of Scope 1 and 2 by January 1, 2028, and Scope 3 by January 1, 2029. New Jersey’s bill, if passed, will require reporting of Scope 1 and 2 within 3 years of the passage of the NJ Bill and Scope 3 within 4 years of passage of the Bill. New York’s bill if passed will require reporting of Scope 1 and 2 by 2027 and by January 1, 2028, for Scope 3.

As readers will likely recall and as commented on in our pieces on New Jersey, New York and Colorado, the SEC had pursued a similar path during 2023 and 2024, issuing proposed rules, and then final rules and then revised final rules which were then challenged and consolidated into one case in the 8th Circuit. The SEC’s final rules only required reporting on Scope 1 and 2 after receiving a backlash of comments about required Scope 3 reporting. As of February 11, 2025, the SEC’s acting Chairman Mark Uyeda said that the Commission will pause litigation of its climate disclosure rule in the 8th Circuit case, effectively ending, for now at least, the SEC’s pursuit of federal rules focusing on climate disclosure of Scope 1 and 2 greenhouse gases for reporting companies.

Despite the SEC’s position, it appears that states will continue to pursue their own path regarding climate disclosure. While California’s law had been challenged by various parties, earlier this month on February 3, 2025, the District Court for the Central District of California issued an order (https://www.troutman.com/a/web/gEwAfXN75c6MMmenKh3yd3/us_dis_cacd_2_24cv801_d96315207e190_order_granting_defendants_motion_to_dismiss_plaint.pdf) dismissing constitutional challenges posed to SB 253 and SB 261 and clears a path for the California Air Resources Board to develop necessary implementing regulations.

The Illinois, New Jersey, Colorado and New York bills are very similar to the California bill and require reporting starting in 2027 and additional reporting in 2028 for Illionois and New York and starting in 2028 and continuing in 2029 for Colorado and potentially in 2028 and 2029 for New Jersey depending on when the NJ version is passed. The bills also require either a third-party verification in the case of Colorado, or a third-party report of limited assurance on Scope 1 and 2 in 2027 and a reasonable assurance report starting in 2031 and if in New Jersey beginning in the 4th year after passage of the NJ Bill and thereafter.

Note that unlike the New Jersey bill there is not a specific penalty per day for the failure to report.

If Illinois follows the path of California here, companies with limited contacts to Illinois will find themselves subject to this reporting regime and need to put in the work to measure, monitor and report on their Scope 1, 2 and 3 greenhouse gas emissions if they have sales of over $1 Billion Dollars (and those sales need NOT be in Illinois alone, rather they are in the aggregate and likely will include subsidiary and related entities).

Green Spouts: While it is highly likely that various parties like the US Chamber of Commerce (who sued California for implementing SB 261 and 253) will also attempt to block Illinois from implementing its version of HB 3673, given the District Court’s ruling noted above, it appears that if passed in Illinois, that the constitutional challenges raised by the plaintiffs are not likely to withstand Illinois court scrutiny and Illinois could join California (and Colorado, New Jersey and New York) as requiring such reporting as early as 2028. Again, the Bill needs to clear the House Rules Committee and then needs to be voted on and approved by the full House, the Assembly and also needs the Governor’s signature, but it appears that these steps are not only possible but likely in 2025, partially/fully in reaction to the Federal government’s overall environmental position and its position taken in withdrawing from the SEC Final rules on climate disclosure. This author’s view is that the Bill will likely pass in Illinois and in New Jersey, Colorado and New York and be signed by the respective Governors, will attract challenges like California’s version did and that those challenges under Illinois, New Jersey, Colorado and New York law will survive such a challenge and that these laws will become a reality during 2025/2026.

Duane Morris has an active Sustainability and Risk Mitigation Team to help organizations and individuals plan, respond to, and execute on your Sustainability and Risk Mitigation planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Jeff Hamera, Jolie-Anne Ansley, Robert Montejo, or the attorney in the firm with whom you are regularly in contact.

Earlier in February, we posted about New York’s second in the U.S. “Polluter Pays” law (check the website for a copy of the post that outlines the law that was signed by Governor Hochul in 2024). Not surprisingly, 22 states and some private concerns sued New York claiming the law constitutes “an attack on US energy producers that will be felt by consumers.” An interesting phrase given that one could argue that tariffs on energy do exactly the same thing but a turn of the phrase for a different day.

The states who filed the action (close your eyes and stop reading and see if you can guess who …) via their Attorneys General against New York include Alabama, Arkansas, Georgia, Idaho, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah and Wyoming. Others joining in the lawsuit include Alpha Metallurgical Resources Inc. (a coal supplier), the West Virginia Coal Association, the Gas and Oil Association of West Virginia and America’s Coal Association.

Surprisingly, Tennessee has now put forth a bill in their House entitled the “Climate Resiliency Fund Act.” The bill was assigned to its Agriculture and Natural Resources Subcommittee who is due to meet late this month. Given that Tennessee joined the States who are fighting New York’s bill it would come as a bit of a surprise if this Tennessee Bill which was put forth by a Democrat, actually moves in a Republican-controlled House and Senate.

Tennessee’s bill is similar to the New York and Vermont Superfund Acts in that the bill seeks to hold polluters (i.e., refiners of fossil fuels in this bill) strictly liable and responsible for climate impact damages resulting from more than one billion metric tons of covered greenhouse gas emissions during the covered period. The applicable covered period is defined as January 1, 1995, to December 31, 2025. Funds collected from fines of these responsible actors would be used to prioritize climate change adaption projects.

Green Spouts: The Tennessee Climate Resiliency Fund Act would be the third of its kind state law that attempts to hold a polluter strictly liable for past acts that have created a negative impact on the State’s infrastructure and climate adaptability. The Act makes any entity or successor company that engaged in the trade or business of fossil fuel extraction or refining crude oil between 1-1-1995 and 12-31-2025 strictly liable for its share of costs incurred by the State.  The emitters are being held responsible for their respective portion of greenhouse gas emissions above the 1 billion metric tons noted above. 

So far, only New York and Vermont have passed these types of “Polluter Pays” laws, noting that Massachusetts, California, New Jersey and Maryland are considering them. Whether this type of State Superfund strict liability law gets traction and passage by other states and whether these 22 State Attorneys General follow up with other lawsuits in an effort to blunt the impact of these laws, remains to be seen but it is surely a further evolution/development and one which bears watching, especially in light of the new Administration federally which will likely see the Federal government take a step back from its climate initiatives and by default will leave the leadership role for climate change initiatives in the hands of state and local government. That said, given that Tennessee is one of the 22 states challenging the legality of the New York bill it would stand to reason that it is very unlikely that this Tennessee bill will move out of its Subcommittee, but we will keep an eye out in case lightning strikes here.

Duane Morris has an active Sustainability and Risk Mitigation Team to help organizations and individuals plan, respond to, and execute on your Sustainability and Risk Mitigation planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Jeff Hamera, Jolie-Anne Ansley, Robert Montejo, or the attorney in the firm with whom you are regularly in contact. Duane Morris has an active Sustainability and Risk Mitigation Team to help organizations and individuals plan, respond to, and execute on your Sustainability and Risk Mitigation planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Jeff Hamera, Jolie-Anne Ansley, Robert Montejo, or the attorney in the firm with whom you are regularly in contact.

On February 3, 2025, the New Jersey Senate introduced and referred S4117 to its Environment and Energy Committee proposed Bill S4117. See attached draft copy at https://legiscan.com/NJ/text/S4117/2024

Like the Colorado and New York bills that were previously reported on and which are being considered by their respective state legislatures, if enacted, the New Jersey Climate Corporate Data Accountability Act could become the fourth bill passed in the United States, which bills are all aimed at requiring entities with connections to New Jersey to report on their greenhouse gas emissions under Scope 1, Scope 2 and Scope 3 beginning 3 years from the effective date of the NJ Bill (which could be as soon as 2028). New Jersey would join Colorado, California and New York (if New York’s and Colorado’s bills move to passage) as the fourth state in the US in requiring this type of reporting for companies with over $1 Billion in revenue.

Between New Jersey at $666.9 Billion, Colorado at $437 Billion, New York at $1.6 Trillion of real GDP and California at $2.9 Trillion of real GDP, these four states together would represent more than 26.9% of the US’s real GDP being subject to Scope 1, 2 and 3 reporting requirements for greenhouse gas emissions.

California passed their version of a very similar reporting bill, SB 253, in 2023, with an effective date of January 2026. New York’s bill, if enacted, required regulations to be passed by December 31, 2026, with an effective reporting requirement for entities subject to the bill during 2027 for Scope 1 and 2 and 2028 for Scope 3. Colorado’s bill if passed will require reporting of Scope 1 and 2 by January 1, 2028, and Scope 3 by January 1, 2029. New Jersey’s bill, if passed, will require reporting of Scope 1 and 2 within 3 years of the passage of the NJ Bill and Scope 3 within 4 years of passage of the Bill.

As readers will likely recall and as commented on in our pieces on New York and Colorado, the SEC had pursued a similar path during 2023 and 2024, issuing proposed rules, and then final rules and then revised final rules which were then challenged and consolidated into one case in the 8th Circuit. The SEC’s final rules only required reporting on Scope 1 and 2 after receiving a backlash of comments about required Scope 3 reporting. As of February 11, 2025, the SEC’s acting Chairman Mark Uyeda said that the Commission will pause litigation of its climate disclosure rule in the 8th Circuit case, effectively ending, for now at least, the SEC’s pursuit of federal rules focusing on climate disclosure of Scope 1 and 2 greenhouse gases for reporting companies.

Despite the SEC’s position, it appears that states will continue to pursue their own path regarding climate disclosure. While California’s law had been challenged by various parties, earlier this month on February 3, 2025, the District Court for the Central District of California issued an order (https://www.troutman.com/a/web/gEwAfXN75c6MMmenKh3yd3/us_dis_cacd_2_24cv801_d96315207e190_order_granting_defendants_motion_to_dismiss_plaint.pdf) dismissing constitutional challenges posed to SB 253 and SB 261 and clears a path for the California Air Resources Board to develop necessary implementing regulations.

The New Jersey, Colorado and New York bills are very similar to the California bill and require reporting starting in 2027 and additional reporting in 2028 for New York and starting in 2028 and continuing in 2029 for Colorado and potentially in 2028 and 2029 for New Jersey depending on when the NJ version is passed. The bills also require either a third-party verification in the case of Colorado, or a third-party report of limited assurance on Scope 1 and 2 in 2027 and a reasonable assurance report starting in 2031 and if in New Jersey beginning in the 4th year after passage of the NJ Bill and thereafter.

Note that the New Jersey Bill includes an increasing fine of $10,000 for the first offense, up to $20,000 for the second offense and up to $50,000 for the third offense and each subsequent offense. Note that if a violation continues, each day is an additional and separate offense of $50,000 each for failure to file the applicable report.

If New Jersey follows the path of California here, companies with limited contacts to New Jersey will find themselves subject to this reporting regime and need to put in the work to measure, monitor and report on their Scope 1, 2 and 3 greenhouse gas emissions if they have sales of over $1 Billion Dollars (and those sales need NOT be in New Jersey alone, rather they are in the aggregate and likely will include subsidiary and related entities).

Green Spouts: While it is highly likely that various parties like the US Chamber of Commerce (who sued California for implementing SB 261 and 253) will also attempt to block New Jersey from implementing its version of S4117, given the District Court’s ruling noted above, it appears that if passed in New Jersey, that the constitutional challenges raised by the plaintiffs are not likely to withstand New Jersey court scrutiny and New Jersey could join California (and Colorado and New York) as requiring such reporting as early as 2028. Again, the Bill needs to clear the Senate Committee and then needs to be voted on and approved by the full Senate, the Assembly and also needs the Governor’s signature, but it appears that these steps are not only possible but likely in 2025, partially/fully in reaction to the Federal government’s overall environmental position and its position taken in withdrawing from the SEC Final rules on climate disclosure. This author’s view is that the Bill will likely pass in New Jersey given the Governor will be leaving office at the end of 2024 and in Colorado and New York and be signed by the respective Governors, will attract challenges like California’s version did and that those challenges under New Jersey, Colorado and New York law will survive such a challenge and that these laws will become a reality during 2025/2026.

Duane Morris has an active Sustainability and Risk Mitigation Team to help organizations and individuals plan, respond to, and execute on your Sustainability and Risk Mitigation planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Jeff Hamera, Jolie-Anne Ansley, Robert Montejo, or the attorney in the firm with whom you are regularly in contact.

On January 28, 2025, the Colorado House in its Energy and Environment Committee proposed House Bill 25-1119. See attached draft copy at https://leg.colorado.gov/sites/default/files/documents/2025A/bills/2025a_1119_01.pdf.

Like the New York bill, if enacted, the Colorado bill would become the second or third set of bills passed in the United States which are aimed at requiring entities with connections to Colorado to report on their greenhouse gas emissions under Scope 1, Scope 2 and Scope 3 beginning in 2028. Colorado would join California and likely New York (if New York’s bill moves to passage) as the third state in the US in requiring this type of reporting for companies with over $1 Billion in revenue.

Between Colorado at $437 billion, New York at $1.6 Trillion of real GDP and California at $2.9 Trillion of real GDP, these three states together would represent more than 21.5% of the US’s real GDP being subject to Scope 1, 2 and 3 reporting requirements for greenhouse gas emissions.

California passed their version of a very similar reporting bill, SB 253, in 2023, with an effective date of January 2026. New York’s bill, if enacted, required regulations to be passed by December 31, 2026, with an effective reporting requirement for entities subject to the bill during 2027 for Scope 1 and 2 and 2028 for Scope 3. Colorado’s bill if passed will require reporting of Scope 1 and 2 by January 1, 2028, and Scope 3 by January 1, 2029.

As readers will likely recall and as commented on in our piece on New York, the SEC had pursued a similar path during 2023 and 2024, issuing proposed rules, and then final rules and then revised final rules which were then challenged and consolidated into one case in the 8th Circuit. The SEC’s final rules only required reporting on Scope 1 and 2 after receiving a backlash of comments about required Scope 3 reporting. As of February 11, 2025, the SEC’s acting Chairman Mark Uyeda said that the Commission will pause litigation of its climate disclosure rule in the 8th Circuit case, effectively ending, for now at least, the SEC’s pursuit of federal rules focusing on climate disclosure of Scope 1 and 2 greenhouse gases for reporting companies.

Despite the SEC’s position, it appears that states will continue to pursue their own path regarding climate disclosure. While California’s law had been challenged by various parties, earlier this month on February 3, 2025, the District Court for the Central District of California issued an order (https://www.troutman.com/a/web/gEwAfXN75c6MMmenKh3yd3/us_dis_cacd_2_24cv801_d96315207e190_order_granting_defendants_motion_to_dismiss_plaint.pdf) dismissing constitutional challenges posed to SB 253 and SB 261 and clears a path for the California Air Resources Board to develop necessary implementing regulations.

The Colorado and New York bills are very similar to the California bill and require reporting starting in 2027 and additional reporting in 2028 for New York and starting in 2028 and continuing in 2029 for Colorado. The bills also require either a third-party verification in the case of Colorado, or a third-party report of limited assurance on Scope 1 and 2 in 2027 and a reasonable assurance report starting in 2031.

Note that the Colorado bill includes a $100,000 fine per day for failing to file the applicable report.

If Colorado follows the path of California here, companies with limited contacts to Colorado will find themselves subject to this reporting regime and need to put in the work to measure, monitor and report on their Scope 1, 2 and 3 greenhouse gas emissions if they have sales of over $1 Billion Dollars (and those sales need NOT be in Colorado alone, rather they are in the aggregate and likely will include subsidiary and related entities).

Green Spouts: While it is highly likely that various parties like the US Chamber of Commerce (who sued California for implementing SB 261 and 253) will also attempt to block Colorado from implementing its version of HB 25-1119, given the District Court’s ruling noted above, it appears that if passed in Colorado, that the constitutional challenges raised by the plaintiffs are not likely to withstand Colorado court scrutiny and Colorado could join California (and New York) as requiring such reporting as early as 2028. Again, the Bill needs to clear the House Committee and then needs to be voted on and approved by the full House, the Senate and also needs the Governor’s signature, but it appears that these steps are not only possible but likely in 2025, partially/fully in reaction to the Federal government’s overall environmental position and its position taken in withdrawing from the SEC Final rules on climate disclosure. This author’s view is that the Bill will likely pass in Colorado and New York and be signed by the respective Governors, will attract challenges like California’s version did and that those challenges under Colorado and New York law will survive such a challenge and that these laws will become a reality during 2025/2026.

Duane Morris has an active Sustainability and Risk Mitigation Team to help organizations and individuals plan, respond to, and execute on your Sustainability and Risk Mitigation planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Jeff Hamera, Jolie-Anne Ansley, Robert Montejo, or the attorney in the firm with whom you are regularly in contact.

Yesterday, I had the pleasure of hosting Dr. Chris Pyke (GRESB), Chris Cayten, M. Arch, LEED AP (Code Green), and Duncan C. Ellis (Marsh) on my monthly sustainability and risk mitigation webinar where we focused on the ever-intensifying impact of storms, wildfires and natural disasters and how insurance is figuring into the picture (or not) for commercial real estate.

As weather related climate risks intensify, the panelists uniformly agreed that real estate and insurance industries are shifting from high-level risk awareness to tangible asset-level resilience and action. We spent the hour exploring how climate risk, insurance market trends, and financial resilience are reshaping the built environment.

Key Takeaways:

• The Climate Risk Landscape Is Evolving Rapidly, and the number of events and the impact of these weather-related events are increasing in number and severity.
• Natural disasters are increasing in frequency and cost, with the U.S. averaging 23 billion-dollar plus disasters per year in the last four years (compared to 9 events per year from 1980-2024).
• Canada’s insurance claims have surged 93% over the past decade, signaling market instability.
• Practitioners have moved from discussing rental premiums for having certain green features at their properties to focusing on Risk Mitigation and Efficiency (some would say they have returned to this place)
• Sustainability is no longer just about certifications; it’s about financial risk reduction and fiduciary responsibility in asset preservation.
• Building performance standards (BPS) are increasingly incorporating resilience and physical climate risk into their analysis of where to invest and where to hold vs. sell.
• Insurance Premiums Are Climbing—And Discounts Aren’t Guaranteed for building in resiliency features, but the lack of focus will likely make a property much less desirable to insure at all. Property insurance has leveled over the last few years despite the increase in number of losses and the severity of such losses; the casualty side of the business is driving cost at this point in the cycle.
• Many factors are driving higher property premiums—such as community risk, rebuilding costs, and interest rates—these factors are some of the features which insurance carriers review in pricing coverage are beyond the control of individual property owners.
• While resilience measures may not yield direct insurance discounts, they can help secure better access to coverage and slower premium hikes over time.

Insurance Market Challenges & Risk Differentiation:

Insurers are tightening terms, raising deductibles, and exiting high-risk markets like California and Florida due to regulatory constraints and continued extreme weather risks. Carriers have exited these markets on the residential front rather than the commercial front, but insurance costs in the commercial real estate markets have been priced to take into account property level risk and the insurance carriers’ appetite to take risk in particular markets given the past history with their clients’ losses.

Resilient properties in lower-risk areas may retain more value and command higher rents, thereby reinforcing the financial case for adaptation.

Modeling of these risks and Data Transparency Are Key to Risk Assessment at the property level as the Insurers rely on tools like RMS and AIR to help price and assess weather related risk, but inconsistencies in modeling approaches continue to create confusion for real estate owners. Better data alignment between insurers and property owners is critical to improving risk assessment and pricing. Simple things like making sure the insured data is accurate regarding sprinklering, the location of HVAC equipment, what type of resiliency measures have been enacted at the property are critical to making sure the carrier is pricing the applicable real risk into its premium quote.

What Real Estate Owners & Investors Should Do Next:

Understand the insurance models and data sources that underwriters use to assess risk.
Implement resilience measures that demonstrate tangible risk reduction to insurers.
Engage insurers early and improve transparency to ensure fairer risk assessments and pricing.

As climate-driven losses mount, risk mitigation is becoming a business necessity rather than an optional sustainability strategy. Those who adapt will not only protect asset value but also navigate insurance challenges more effectively in an increasingly volatile market.

Physical risk assessment and mitigation is part of a broader trend in sustainable real estate where down-side risk reduction is replacing the ephemeral “green premium”.

Green Spouts: Undeniable risks such as the increase in severity of weather-related events (e.g., flooding, hurricanes, wildfires) and similar climate events and upcoming Building Performance mandates in various cities and states are motivating owners of all sizes to build and operate buildings more responsibly, regardless of their ideology or opinion of “sustainability”. Irrespective of being blue or red, owners are focusing on risk mitigation measures that make financial sense, including physical risk mitigation.

Duane Morris has an active Sustainability and Risk Mitigation Team to help organizations and individuals plan, respond to, and execute on your Sustainability and Risk Mitigation planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Jeff Hamera, Jolie-Anne Ansley, Robert Montejo, or the attorney in the firm with whom you are regularly in contact.